- The failure of Silicon Valley Bank and Signature Bank looms large over the markets.
- The Consumer Price Index for February is due this morning.
- Uber and Lyft win big in court in California.
Here are the top stories investors need to start their trading day:
Investors are looking for clarity after a few days of dramatic turns. Monday was a mess as the markets tried to figure out the ramifications of the closure of Signature Bank and Silicon Valley Bank. The Dow finished lower, marking its fifth consecutive losing day, while the Nasdaq managed a slight win. Regional bank stocks took a hit as government measures to limit the fallout from Silicon Valley Bank and Signature failed, at least for the time being, to reassure investors and depositors alike. First Republic, for example, fell a whopping 62% on Monday. However, these stocks may be waiting for a recovery on Tuesday. Follow live market updates.
Federal Reserve Chairman Jerome H. Powell testifies before a House Financial Services hearing on the “Federal Reserve Semi-Annual Monetary Policy Report” on Capitol Hill in Washington, US, March 8, 2023.
Kevin Lamarck | Reuters
The Federal Reserve is still on track to raise its benchmark interest rate by a quarter point next week, despite the second and third largest bank failures in history. As of Monday, even with the turmoil in the market, especially among regional banks, traders saw an 85% chance that the rate hike would continue while the central bank tries to calm inflation. Goldman Sachs has emerged as a ambivalent voice, however, arguing that Fed Chairman Jerome Powell and his crew will, for now, be too late to raise interest rates. “We believe that Fed officials are likely to prioritize financial stability for now, viewing this as an immediate problem and high inflation as a medium-term problem,” Goldman said in a note to clients. The next policy-setting meeting of the Federal Reserve is scheduled for March 21-22.
A shopper browses through the meat section of a Los Angeles supermarket on February 13, 2023 in Los Angeles.
Mario Tama | Getty Images News | Getty Images
Speaking of inflation, the government’s volatile February consumer report is due at 8:30 a.m. ET Tuesday. It is expected to be somewhat cooler than the CPI for January, which indicates that the Fed continues to make modest progress in its battle against rising prices. This report will take on added significance given the context of the failure of the Silicon Valley bank and signature bank, which sparked turmoil among regional banks. As CNBC’s Patty Domme points out, before the banking turmoil, a hot CPI report may have prompted the Fed to raise interest rates by half a point next week. Now, with the stability of the financial system on everyone’s mind, even a larger-than-expected reading is unlikely to push the Fed higher than a quarter of a point.
Travelers wait for an Uber to join a ride at Los Angeles International Airport (LAX) on February 8, 2023 in Los Angeles, California.
Mario Tama | Getty Images
Shares of Uber, Lyft and DoorDash all jumped in out-of-hours trading after a California appeals court allowed those companies to treat their drivers as independent contractors rather than employees. The resolution endorsed a measure called Proposition 22, which California voters approved in November 2020 after a costly campaign on which carriers and delivery companies spent more than $180 million. Monday’s ruling overturned a lower court’s rejection of Proposition 22, which had been challenged by a group of tour drivers. This action exempts Uber and others from following many compensation laws.
Locals in the village of Bohorodychne walk on a destroyed bridge over the Siversky Donets River to retrieve bread from the other bank, in Bohorodychne, Donetsk Oblast, on March 10, 2023, amid Russia’s military invasion of Ukraine. (Photo by Anatoly Stepanov/AFP) (Photo by Anatoly Stepanov/AFP via Getty Images)
Anatoly Stepanov | Afp | Getty Images
The Russian Deputy Foreign Minister told a Russian news agency that the authorities extended the grain export agreement between Russia and Ukraine for 60 days. The agreement enabled Ukraine to export wheat, corn, and other agricultural products across the Black Sea. The Russian blockade during the early stages of the war damaged the global food supply and increased price inflation. Elsewhere, Ukrainian President Volodymyr Zelensky defended his decision to continue defending the eastern Ukrainian city of Bakhmut. “We must destroy the enemy’s military power – and we will,” he said. Follow live war updates.
— CNBC’s Sarah Maine, Jeff Cox, Patti Dome, Rohan Goswami, and Holly Ellyatt contributed to this report.
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